How does Arbitrum [ARB] typically react after an unlock?

Posted: September 19, 2023

• ARB appreciated by 3% on the first day of the unlock, followed by a long downtrend
• The upcoming cliff unlock next year could be a big challenge for ARB

Ever since its launch in March earlier this year, Arbitrum’s [ARB] tokenomics have been a source of significant interest in the crypto-space.

Realistic or not, here’s ARB’s market cap in BTC terms

The most notable has been the token unlock feature, which involves a staggered release of a fixed number of tokens at predetermined time intervals. Thanks to the fact that these events add inflationary pressure and act as bearish catalysts for ARB, experts and traders actively monitor their schedule.

ARB fluctuates after unlocks

Token analytics firm Token Unlocks took to social platform X to sketch a price impact analysis of ARB in the aftermath of an unlock.

It was observed that ARB appreciated by 3% on the first day of the unlocks, as shown below. Then, a long three-week downtrend ensued, one which caused the price to dip by 21%.

Source: Token Unlocks

However, 25 days after the unlock, the prices started to recover dramatically, rising by nearly 19% from the unlock day. A roller coaster, ain’t it?

Recall that about 1.275 billion ARB tokens, out of the maximum supply of 1o billion, were released as part of the March Airdrop into public hands. The rest were set aside for investors and core contributors.

Overall, 49% of the maximum supply has been locked while 5.07 billion, or 51%, still remains unlocked, as per Token Unlocks’ dashboard.

Source: Token Unlocks

Big challenge lies ahead

Arbitrum DAO is gearing up for a cliff unlock on 16 March 2024. This would populate the market with a whopping 1.11 billion ARB tokens, worth $907 million at current market prices. Moreover, the amount to be unlocked would be 87% of ARB’s circulating supply.

Additionally, this event would trigger an unlock schedule with sixteen-day intervals over the next four years. No prizes for guessing how 2024 and beyond is going to test the conviction of ARB holders.

Is your portfolio green? Check out the ARB Profit Calculator

At the time of publication, ARB was exchanging hands at $0.8253, up 4.3% in the last seven days, as per data from CoinMarketCap.

Although the token does not gain value via Arbitrum’s network activity, it allows holders to vote on important decisions and suggest network changes. In fact, Arbitrum became a full-fledged decentralized autonomous organisation (DAO) with the launch of ARB.